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July 26 Chart of the Day - Chevron

Chevron (CVX) surprised Wall St. Sunday, releasing better-than-expected second-quarter figures early, along with announcing changes to its leadership structure.

Essentially, a lot of fundamentals that had very little impact on its stock price from a price action technical analysis perspective. Or did it?

Let's start by taking a bird's eye view from its higher time frame monthly chart.  We start our analysis on every chart review from here in an attempt to develop a directional assessment and overall market sentiment.

From the monthly chart it's clear to us that the $130 price area ($127.34 - $135.10 to be more precise) has represented a major line in the sand during the past 10+ years.  We can see that twice during that time period price was fiercely rejected in that zone.  But, early last year price broke out and above that zone peaking at $189.68 late last year.  

This year, price has been making a series of lower highs and lower lows (down trend) seemingly drifting back towards the $130 breakout zone.  If this were to occur it would be a classic "break and retest" albeit on a grand scale... but "technically correct."

In the meantime, on the daily chart we've noticed price behaving in a very precise manner with respect to Fibonacci retracements and extensions in both directions and forming what could be shaping up to be a wedge pattern, where breakouts in either direction can be sudden and forceful.

Regardless of your investing or trading style, knowing how to determine these price levels of interest can be a difference maker for sure.

Ultimately, we wouldn't be surprised to see price return to the $130 area nor would we be surprised to see price go on to make new all time highs from here because we're neither bulls nor bears.  

Simply put, we're traders.

So what's next?

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

We'd like to hear from you in the comments sections.

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